WASHINGTON, April 18 U.S. environment regulators
said Wednesday they will give natural gas and oil drillers more
than two years of extra time to invest in equipment that slashes
unhealthy air emissions from fracking wells, citing a lack of
clean technology.

Drillers that use fracturing, or fracking, to extract
natural gas and oil will not be required to use the equipment
until January 2015, the Environmental Protection Agency said as
it finalized long-delayed rules on the smog-forming emissions.

The new rule comes as the Obama administration tries to
balance its support for a booming industry that could help the
United States become a major exporter of natural gas, while
still addressing concerns about its safety.

In a draft rule in July the EPA had proposed drillers would
have to invest in equipment to capture the waste gasses soon
after the standard was finalized.

Now, drillers will have until 2015 to invest in equipment
that capture the emissions, a process known as 'green
completion'. Until then they can burn off, or flare, the gas.

The decision to phase in the requirements for green
completion equipment came after the EPA reviewed 150,000
comments on the proposed rule, and after it studied the
availability of the equipment, said Gina McCarthy, the EPA's
assistant administrator on air and radiation.

Some companies already conduct green completions
voluntarily. They sell the methane to lower the costs, though
gas prices at 10-year lows can make the savings harder to
achieve.

Companies including Chesapeake Energy and Exxon
Mobil could be forced by the rules to invest in
pollution control technologies.

Drilling proponents have warned the Obama administration
against imposing too many costly restrictions on natural gas.
Last week, the White House formed an interagency panel to
support gas development and streamline regulation in an
executive order that recognized states are the main regulators
of natural gas drilling.

NOT THE BEST SYSTEM

Environmentalists and health groups have complained that
fracking operations near schools and homes can harm air and
water supplies.

"It's certainly a delay in the best system of emissions
reductions," said David McCabe, an atmospheric scientist at the
Clean Air Task Force said about the final rule. "It's very clear
that flaring is not the best system of emissions reduction
particularly for air quality, but also for climate," he said.

Flaring the initial emissions, which mainly come in a rush
in the first days after fracking a new well, emits millions of
tons of carbon dioxide, he said. Much of the waste gas is
methane, the main component of natural gas, and
environmentalists say drillers should be required to capture it.

Still, environmentalists said flaring methane was better
than venting it because the gas is more than 20 times more
potent a greenhouse gas than carbon dioxide.

Howard Feldman, the director of scientific and regulatory
policy at the American Petroleum Institute, applauded the
phase-in of the green completion requirement, that will affect
more than 13,000 new wells each year.

"Overall the changes are constructive," said Feldman, adding
that the EPA decision gives companies time to put in place
equipment that is not yet readily available.

In fracking, drillers blast large amounts of sand and water
laced with chemicals deep underground to free natural gas and
oil.

The EPA said the rules will reduce emissions that contribute
to smog by 95 percent from fracking wells.

The API has said the equipment to capture emissions in the
first few days after fracking is completed could cost about
$180,000 per well. Environmentalists say the cost is far lower
as it is mostly needed in the early days after fracking or
re-fracking a well.

U.S. lawmakers were divided over the rule. Representative
Edward Markey, the top Democrat on the House Natural Resources
Committee welcomed them.

"These new EPA safety and environmental standards will
ensure that less pollution escapes into our air and our
atmosphere, and that the natural gas industry won't be able to
escape proper oversight of their practices," Markey said.

Senator James Inhofe, the top Republican on the Senate
environment committee, and a global warming skeptic called the
rules another step in President Barack Obama's "war on natural
gas production."
(Reporting By Timothy Gardner; Editing by Maureen Bavdek and
Sofina Mirza-Reid)